Labor to step up drive for safer, simpler super

Labor will step up its push for further superannuation reforms with the release of 27 policy proposals aimed at making super safer.

The Opposition leader, Simon Crean, will release details today of the second tranche of Labor's new superannuation policy following the release last week of seven proposals to make super more simple.

Key proposals will include further safeguards for employee entitlements and a crackdown on excessive fees and charges.

Labor would offer super fund members full compensation for theft and fraud from their super funds, extending on the limited protection presently available.

It would extend these protections to cover losses due to negligence by super fund trustees and losses from retirement income products such as pensions and annuities.

It would also expand the present protection of employee entitlements such as accumulated leave and redundancy payments when employers fail to include outstanding compulsory super payments.

But it is the proposals on regulating fees and charges that will prove most contentious.

On this front, Labor has already committed itself to prohibiting entry and exit fees on superannuation products. The shadow minister for retirement incomes, Senator Nick Sherry, said last week that Labor feared the Government's model for allowing super investors to choose their own funds would result in an explosion of exit fees on super products to lock in investors if these imposts were not outlawed.

Mr Crean will announce further measures today to crack down on the payment of trailing commissions to people selling super funds.

Labor argues a trail of 1 per cent a year to an adviser over 40 years can cut a fund member's retirement benefit by as much as 22 per cent.

While the curbs on trail commissions would apply only to compulsory super contributions (not to any extra money employees choose to set aside), it is expected prohibition of these commissions in some instances, and restrictions in others, will be widely resisted by financial planners and fund managers.

Mr Crean will also announce measures to protect super fund members from excessive costs charged on insurance offered through super funds.

Labor cites one instance where a fund member received $1600 in super contributions from his employer and paid $1350 for compulsory death and disability insurance.

In another case, an individual paid 2 per cent out of their total 9 per cent compulsory super contributions for salary continuance insurance.